The Centre is planning to replace the two-decade-old Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA) with a revamped legislation that promises more days of work, but asks states to share the burden and freezes employment during the farming season.
The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin), or the VB–G RAM G Bill, 2025 expands employment from 100 days to 125 days, sharpens the focus on strategic infrastructure, introduces localized and integrated planning, and revises the existing funding pattern.
FAQs circulated by the ministries of agriculture and rural development said that the scheme has been shifted from a central sector to a centrally sponsored scheme because rural employment is inherently local, and states now have to share cost and responsibility. According to the FAQs, the funding pattern between the Centre and states will change to 60:40. The bill proposes a 90:10 split for northeastern states and the Himalayan states and certain Union territories.
Under the existing arrangement, states pay 25% of the materials and 50% of the admin cost, the FAQ said.
In a move aimed at strengthening rural income security, the employment guarantee under the scheme has been raised from 100 to 125 days. The increase is expected to provide additional wage employment to rural households, helping them cope with income uncertainty and rising living costs. Officials said the expanded guarantee would offer greater financial stability, particularly during periods of agrarian distress and limited non-farm employment opportunities.
“The increase in the number of guaranteed days to 125 is a welcome move,” said A.K. Verma, director of the Centre for the Study of Society and Politics (CSSP), as it is likely to provide additional remuneration to workers. “But the 60:40 sharing provision may be inconvenient for states as they are cash-strapped.”
The increased burden on state governments to fund the employment guarantee scheme could, however, be due to shoddy implementation and corruption at the state level, said Verma. He added that states may now turn more vigilant. "One advantage of sharing the spending will be that states, which are the implementing machinery of the scheme, may tighten oversight and surveillance over disbursal of funds."
Also, every state government must notify its scheme to operationalise the guarantee within six months of the Bill’s commencement. "If eligible applicants are not provided work within the stipulated period, state governments will be obliged to pay unemployment allowance as per the provisions in the Act, according to the proposed bill.
The bill also overhauls the implementation of the scheme. The Central Gramin Rozgar Guarantee Council and the State Gramin Rozgar Guarantee Councils shall be constituted for review, monitoring and effective implementation of the provisions of the legislation in their respective areas, according to a separate document released by the agriculture ministry.
How funds are allocated is also set to change. Steering committees at central and state levels shall be constituted to recommend on matters concerning normative allocations, convergence and other such matters.
For the first time, the Bill proposes pausing employment guarantee work during peak agricultural seasons to ensure the availability of farm labour.
The states would be required to notify in advance, a total period aggregating to 60 days in a financial year, covering sowing and harvesting, during which no work will be commenced or executed under the Act. States can issue area-specific notifications based on agro-climatic zones and local farm activity patterns.
The revamped framework puts a sharper focus on rural infrastructure development. It prioritises four categories of works: water security through conservation, irrigation and groundwater recharge; core rural infrastructure to improve basic amenities and service delivery; livelihood-linked assets that support agriculture, allied activities and income diversification; and climate-resilient works to prepare villages for extreme weather events. Together, this aims to strengthen rural systems, enhance livelihoods and build resilience, aligning public works with the Viksit Bharat 2047 vision.
Also, the framework proposes stronger incentives to curb misuse, region-specific planning through Gram Panchayat Plans, and a clear division of roles. “With the Centre setting standards and states responsible for implementation and accountability. This cooperative model is expected to improve efficiency and reduce leakages,” according to the FAQs.
“Better incentives to prevent misuse, plans tailored to regional conditions through Gram Panchayat Plans. Centre retains standards, while states execute with accountability and this partnership model improves efficiency and reduces misuse,” the FAQs reads
A communication by the agriculture ministry said MGNREGA was built for 2005, but rural India has transformed since then. “So, to cater to the changing aspirations, stronger convergence is required. Therefore, the Government has resolved to enhance the wage-employment guarantee for rural households from 100 days to 125 days per financial year for anchoring rural asset creation through the enactment of an appropriate Act.”
The government kept MGNREGA allocation unchanged in the FY26 budget from the previous year at ₹86,000 crore. The government's spending under the scheme jumped in FY21 to over ₹100,000 crore due to the Covid-19 pandemic. But it fell in budgetary allocations, which were later revised due to high demand. For instance, in FY24, the government allocated ₹60,000 crore but later revised its estimate to ₹86,000 crore.
MGNREGA was the flagship rural employment scheme of the previous Congress-led United Progressive Alliance regime. The proposed renaming of the scheme has drawn sharp criticism from opposition parties.
The renaming of the scheme is a way of erasing Mahatma Gandhi from our national psyche, especially from the villages where he said India’s soul resides, said K.C. Venugopal, Indian National Congress member of parliament from Alappuzha.
"This move is also nothing but a cosmetic change to paper over the deliberate neglect being meted out to this scheme. MGNREGA workers have been demanding higher wages, but the Centre has been reducing allocated funds for the scheme year after year. The arrears keep piling up, and it seems to be a carefully planned strategy to engineer a slow death for the scheme," Venugopal posted on social media platform X.
